Neelie Kroes, Member of the Commission. Madam President, first of all, let me congratulate the rapporteur, Mrs Quisthoudt-Rowohl, on this excellent report. I also want to thank the rapporteur for the excellent cooperation with the Commission when drafting this report.

Over the past few years, Russia has seen impressive economic development. This is partly due to high energy prices, but also, to a large degree, to a sound macroeconomic policy. Russia is becoming a more and more important economic player in the world. Growth of the Russian economy has averaged 6-7% since 1999; Russia has a considerable budget surplus, is an important destination for foreign direct investments and holds the third largest amount of foreign currency reserves.

We should not forget how important Russia is for the EU, and how important the EU is for Russia. In economic terms, the picture is quite clear: we are by far Russia’s most important trading partner and, in turn, Russia is our third most important partner. The EU is by far the most important investor in Russia. In short, we need each other and we need to work closely with each other; this is in our mutual interest.

At the same time, it is also clear that some problems exist. There are questions about specific issues concerning the business climate, for example the continued high levels of corruption. But there is also a range of specific issues, such as the ban on imports of agricultural products from Poland, the oil supplies to Lithuania via the Druzhba pipeline and the planned increases in export duties for wood. However, despite all these challenges, we should not forget that we also need to look at the overall situation and the very substantial opportunities.

Your report is thus very timely. It provides a comprehensive overview of the issues at stake in EU-Russia relations. Allow me to focus on four points concerning our economic relations that you also highlighted in the report.

First, you rightly insist on the importance of the rule of law. This is not only important for the economic operators that want to invest in Russia: it is also indispensable for the long-term economic and political development of Russia itself. What is really needed – and this is not specific for Russia – is sound and effective application of laws and rules, and a fully independent judiciary. Only this will guarantee a predictable and stable economic environment. Rules are the key to attracting investment. But we also need rules for other areas, such as intellectual property rights.

The second point concerns the basis for our future cooperation. First of all, there is WTO membership, which is not an abstract aim in itself. WTO membership is the indispensable building block for successful and sustainable economic development. The Commission is working hard with Russia to achieve this as soon as possible, but we still need solutions for the outstanding issues. We also need to work towards launching negotiations on a new EU-Russia framework agreement to update the current Partnership and Cooperation Agreement. We should also consider a further deepening and strengthening of our bilateral trade and economic relations once Russia has acceded to the WTO.

In this context, I would like to thank Parliament for its support concerning the latest developments on Siberian overflight payments. The fact that we had a clear position and maintained unity on this issue led to a good result. The signature of the agreement – which has so far only been initialled – is one of our priorities. This issue needs to be resolved before Russia’s WTO accession. President Barroso made this point quite clear at the recent EU-Russia summit in May. On that occasion, the Russian Government confirmed its intention to sign the agreement in the next few months.

The third point concerns energy. You rightly say in your report that the primary objective of EU energy policy cannot simply be to avoid continued energy dependence on Russia. We need fair rules, not politics – rules for predictability and certainty on both sides. The call for security of supply implies security of demand. Our aim should be to promote two-way investment by energy providers and consumers, upstream and downstream. In this context we also need to agree on clear, enforceable standards for energy transit, as well as other aims.

Last, allow me a comment on the area I am responsible for: competition. Over the past few years, the Commission has established close cooperation with the Russian Federal Anti-Monopoly service. I believe we need to further strengthen this dialogue to identify areas where we can work more closely together and build on increasing convergence between our systems. Competition law is an essential feature of good economic governance. The new law adopted last October has given Russian competition policy the means to be really effective. Therefore, we will continue to work with the Russian competition authority in the context of the Common Economic Space and future bilateral agreements with Russia.

In conclusion, allow me once again to congratulate the rapporteur on this excellent and balanced report, which the Commission will certainly take into account in our ongoing and future cooperation with Russia.

Neelie Kroes, Member of the Commission. Madam President, I should like to thank the honourable Members for their comments and the interesting debate. I have taken good note of what you said and I will convey your message to my colleague Mr Mandelson for his consideration. I am sure that he, like me, will be impressed by the high degree of consensus in this House.

Rather than going into detail on the different points raised this evening, I should like to say the following. It is true that many problems exist and our relations are complex. However, this is not surprising given the enormous depth and breadth of cooperation between the Russian Federation and the EU.

In spite of a number of difficult issues, we should not forget that our cooperation with Russia is very successful on many issues. I have already referred to the example of competition policy, where we have established good cooperation, and we have made good progress in aligning our regulatory systems. There are many other examples that I could refer to.

At the same time, it is also clear that we need to tackle the challenges in our relations. We want to work actively with Russia to find solutions to the outstanding issues and we need constructive engagement: only an active dialogue with the Russian side, including on the difficult issues, will allow us to find solutions that are in our mutual interest.

Several Members asked when the EU will be ready to start negotiations on the new agreement. Negotiations on the new agreement will take place as soon as we have the mandate from the Member States. The Commission is working actively with the Presidency, the Member States and Russia to overcome the remaining difficulties.

We and Russia have an interest in a new EU-Russia agreement to replace the existing Partnership and Cooperation Agreement, as our relationship with Russia has developed over the last decade. A new agreement would take relations to a new level and enable them to reach their full potential. However, there is no time pressure: the present Partnership and Cooperation Agreement remains in force and the ‘common spaces’ roadmap provides us with a substantial agenda for the short and medium term. There will be no legal vacuum.

Mrs Foltyn-Kubicka and Mr Seppänen mentioned Polish meat. The Commission is working with Poland and Russia for the lifting of the Russian ban on imports of Polish meat and plant products. We have been very active at all levels to demonstrate to Russia that Poland fully complies with EU legislation and EU-Russia documents concerning veterinary and phytosanitary issues and that the bans should therefore be lifted. Discussions will certainly continue.

Mrs Budreikaitė and Mr Paleckis raised the question of the Druzhba pipeline. The Lithuanian Government has raised this issue. The Commission has kept in close contact with the Russian Energy Minister, Mr Kristenko, and we are urging the Russian authorities to provide Lithuania with full information on the state of the pipeline so that a satisfactory solution can be found.

Several Members spoke more generally about EU-Russia energy relations. Energy is an area which demonstrates our interdependence. Russia needs European markets, investment and know-how just as much as Europe needs Russian oil and gas. We continue to believe that the Energy Charter Treaty offers a good multilateral framework for international trade and investment in energy.

At the most recent summit, a decision was taken to establish an early-warning mechanism. This can help make EU-Russia energy dialogue more operational. Energy will obviously have an important place in the new EU-Russia agreement.

As President Putin assured us at the last summit, Russia respects the key principles of the Energy Charter Treaty and we expect them to be reflected in the new agreement.

Mrs Oomen-Ruijten asked about developments in Russian investment law. I have to make it clear that this is at present a draft law, covering strategic sectors of the economy. The Commission is following the developments closely. We will soon start an investment dialogue with Russia and we will be able to discuss this with you further.

Finally, on the question of the rule of law, human rights and democracy, I can assure you that the Commission will continue to press the importance of respect for common values and will ensure that the new agreement also reflects these values.

In conclusion, I should like to thank the rapporteur once again for an excellent report. We will take it into account as much as possible in our work with Russia.